Video: Are no-tip restaurants the future?

posted at 3:48 pm on April 9, 2014 by Ed Morrissey

Have tips become passé? Not yet, but no-tips restaurants are starting to trend, according to CBS News. At Brand 158 in Glendale, the owner says that he gets better results paying a stable living wage and putting both customers and employees at ease with each other:

Are we headed for the end of restaurant tipping? Yet another eatery is opening up to great fanfare, mostly because it has decided to do away with tips.

The Brand 158 restaurant in Glendale, Calif., has adopted the no-tipping policy because owner Gabriel Frem said he wanted to discourage competition between his employees. And he isn’t including a service charge or upping his prices to make up for it, either.
Frem’s theory is that tips disrupt the working environment and leave workers unsure of their take-home pay from week to week. “We think that if we stabilize the lives of our employees, they can then focus on the customer,” he told The Los Angeles Times.

No-tip restaurants are by no means common, but the idea is starting to take hold across the country. In New York, a Japanese-style pub called Restaurant Riki has banned the practice because it’s more in line with Japanese customs. It’s raised prices to compensate.

Another restaurant, Sushi Yasuda, even goes so far as to chase down customers who left in order to return their tips. According to owner Scott Rosenberg, diners are tired of having to rate their servers and then doing the tip math based on the performance.

A new brewpub scheduled to open this fall in Washington, D.C. will also do away with tipping. The founder of the restaurant, Public Option, plans to pay workers at least $15 an hour. Any money left on the tables will go to charity.

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I would rather have tipping be more optional rather than built into the base pay of the staff. Something nice for good staff and stiff the bad staff.
It depends on how much the mark up on the meals are at the no tip places I guess. Cost is a driver on whether I go out or not and if so where.

I’ve never ben a server before, so bear with me. Doesn’t this hurt some servers at least? Sure you don’t make $15 or even minimum ware, BUT on a busy night you might, IMO, make $36/hour IN TIPS…..4 tables, turning over 2 times an hour, even at $30 per table, with a 15% gratuity actually equals a much better pay rate than $15/hour.

The person who benefits is the customer, it seems to me…I don’t pay $30 for the meal, plus $4.50 tip…I pay ~$32, assuming wages add 6% to my total…

Taking away tips from any service industry is bad thing IMO. Marginal service will result and your best people will have zero incentive to remain your best people. The biggest hustlers in any tipping environment are that way because of the tips.

I seem to remember a story circulating Facebook about a professor who gave students a chance to prove whether socialism worked, by averaging their test scores. It didn’t turn out well for them, and I don’t think it will turn out well for no-tip restaurants. I think they will start having more problems with service than tip restaurants because there is no incentive to provide good service, only the threat of firing. All stick with an entitlement salary doesn’t seem to be the way to incentivize great service.

Whatever restaurant pays its wait staff $15 an hour likely is charging high prices already or has only 9 tables that can be waited on by a staff of 3 waiters.

But if its a restaurant with 50 tables and each waiter does 4 tables, that’s 12 waiters at $15 an hour. If the shift is 5 hours, that’s $75 per waiter x 12 = $900 for the shift in wait staff labor. That’s a lot of money.

Recall 3rd Rock from the Sun, an episode where Lithgow’s character places a stack of dollar bills on the table, adding and removing bills depending on whether the service satisfies or displeases him. I always thought that might be a way to go.

That is why my first comment was that it should be optional. They should be paid enough that tips are not mandatory, but they should also not be prohibited for good service.
The way it is now, when I eat out, I have to weigh the poor service against the fact that the person without my tip is going suffer significantly. I prefer not to be put in a position where it is nearly mandatory to reward poor service just to have a clear conscience.

Ideally poor staff should turn over and allow hopefully better staff to come in. Tips are a good way to do this. But if the pay is so low, it leaves me not feeling good about leaving a skimpy tip. Man does it piss me off.

I travel to the Middle East, Europe and other areas of the world, tipping is built into the bill. Keep it that way!

hip shot on April 9, 2014 at 3:53 PM

Then what’s the point?
Tips are supposed to reflect the level of service provided.
In my experience, when tips are automatically built into the bill, the quality of service is noticeably lower – the servers know they’re getting the tip no matter what they do.
In reality though, if you get lousy service, and your tip reflects that, don’t ever go back to that restaurant again. You probably won’t want to anyway, but you can be sure the (appropriately) stiffed servers will remember you.

I agree. Soon it will not make a difference whether Americans are ambitious career minded workers or lazy hourly workers. This must be the step that follows the kids no longer having winners and losers in youth sports. Can’t help but relate this mentality to folks I met in Russia back in the early 90’s.

tcufrog, it probably means FEWER server positions… right now your labour is running @ about 1/3 of that… so to make sure that we aren’t paying $900/shift we’ll cut back on the shift workers…. Sure on Friday/Saturday nights you’ll run $900/shift because you’re busy, but the rest of the time you’ll skimp & make do…. UNLESS, this is a very successful/hi-end business, that is busy pretty much all the time.

I know at least one server that would absolutely disagree with the no-tip approach…

Several years ago, some friends and our family dressed up and went to the Renaissance Festival. It was a great day, but we were all hot and tired afterwards. Our three kids at the time were really tired, but hungry. After waiting in line for almost an hour to get into the restaurant, we told the server that we were hot, tired and hungry… but had plenty of money for tips for great service.

We had appetizers in less than 5 minutes, and entrees only 10 minutes later! No glass ever made it to less than half full, and he checked on us every 5 minutes. If we would have asked, he would have danced on the table for us. It was a tremendous evening and when it was all done… our server received over $100 in tips for our one table! And he earned every dollar. I have never received such service in any restaurant since.

I’m tempted to do 20% or more on lower-end restaurants as long as the service is good. On higher-end restaurants, my base is 15% and scalable in either direction.

Ed Morrissey on April 9, 2014 at 3:59 PM

I use a lot of coupons. I usually add half the savings and then a tip on top of that. But sometimes the service or the food just is not that good. Then I am sitting there boiling about the poor service and my conscience about leaving a worker poorly compensated. Mostly a personal issue, but I think the optional tipping would help me out (selfish!). They get paid a reasonable wage, and tips round it out for the best ones.

Darth they formed a Union in SanFran….but the unionized strip club closed… something about the employees decided that they would show as much or as little of themselves as THEY wanted, not what the customer wanted. It was an interesting article, written by a rather clueless young womon not stupid, but one of the educated stupid.

My son is a manager, and former server, in a restaurant that has an odd set up – customers order at the register from a big board menu, then servers bring their food to them. As a result, people generally don’t tip very well.
But they also do a tip pool that is equally shared among all servers, with a percentage going to the bussers and cooks. One bad server kills the tip pool for everyone on the shift. From what we’ve seen/heard, they seem to have a fairly high turnover rate for servers – so it’s hard to keep good staff in the environment they’ve created.
But I will say, when we’ve gone there, the service has been good.
Of course, it probably doesn’t hurt that the servers figure out we’re related to the management.

Everything else around here is going the way of Europe, so why not also eliminate the tipping process? Before we devolved into “Amerika,” the tipping system made sense, but now what difference does it make?

Oh, and before I forget. If the tipping system goes, so do those G.D. tipping jars I see at Dunkin Donuts, Subways and various pizza joints where I take out my order. The cashier doesn’t get a tip for ringing up my order.

I don’t think that the current system really incentivizes good service. I think that most people in the U.S. tip the same regardless of whether or not the service is good or bad. It is just something that most do because it is a courtesy. Additionally, lots of restaurants pool tips, especially tips on credit cards, so a waiter may not be benefiting directly from providing good service.

I’m tempted to do 20% or more on lower-end restaurants as long as the service is good. On higher-end restaurants, my base is 15% and scalable in either direction.

Ed Morrissey on April 9, 2014 at 3:59 PM

Since I have a kid in the business, I generally tip fairly well for good service – but about what you detailed in most cases.

However, our favorite sushi place is owned and run by a young Korean couple who are VERY nice people, serve great food, and know how to treat their regulars very well. I usually tip at least 20% even for a takeout order because the owner/server always gives me a free glass of wine while I wait, and quite often throws something extra into the order for my wife.

The problem with tipping is that the incentives aren’t 100% aligned. Servers are at the mercy of their bartenders, cooks, bussers, and other servers if they want to provide the best possible dining experience to avoid stingy tips. The desire to keep a high paying job is all the incentive that is needed to provide good service.

I laugh at all the Democratic gubernatorial candidates in PA who are pledging to eliminate the “sub-minimum wage rate” for servers. When that happens, my tips will stop.

Additionally, lots of restaurants pool tips, especially tips on credit cards, so a waiter may not be benefiting directly from providing good service.

Illinidiva on April 9, 2014 at 4:17 PM

Not directly – but the other servers know if one server is not pulling their weight – because the tip pool for everyone suffers when that person is on shift. And they DO let management know about it.
Also, if service is really bad, people don’t hesitate to grab a manager and let them know about it. Then it’s up to management to solve the problem – usually by firing the lousy employee after a warning or two.

Pros:
– Deadbeats who refuse to tip will finally be forced to pay their fair share for service
– No mental haggling over tips
– Servers will have to report 100% of their taxable income (just like me. Heh… schadenfreude!)

Cons:
– Owners will be much less inclined to keep extra staff on the clock at $15 an hour than they do at $2.15 = generally poorer service and more underemployment/unemployment
– No motivation for servers to excel
– Servers will have to report 100% of their taxable income (screw the government!)

I don’t think that the current system really incentivizes good service. I think that most people in the U.S. tip the same regardless of whether or not the service is good or bad. It is just something that most do because it is a courtesy. Additionally, lots of restaurants pool tips, especially tips on credit cards, so a waiter may not be benefiting directly from providing good service.
Illinidiva on April 9, 2014 at 4:17 PM

I agree.

And I don’t like how all servers just expect tips regardless.

I think we should be able to score servers 1-10 when we pay, and then let the business sort out bonuses for the highest scorers.

Having spent time in Europe and Asia, No Tipping is the way to go. The other concept that needs to go along with tipping is the idea of a dedicated server. Everyone In the resturant should be able to help you, not just your server.

It’s tough to compare this type service between Europe and America. You have to buy into the whole European thing and not cherry pick a single piece of it if you do. The employee may get paid better and provide better service but they are giving up half their take home pay to be taken care of in the government system when they retire.

In my opinion this is what the liberals here are trying to accomplish (Europeanizing America) but it comes with strings attached for all of us. I have no interest in living in a communal world or I’d live in Europe.

In parts of South America, waiting tables or tending bar is a career even in not so uspale establishments. They apparently pay a decent wage and there is tipping but never more than 10%. Very rare to get lousy service. I’ve always thought tipping in the U.S. was to compensate for bad management. Lousy waiter, lousy tips, and he shapes up or leaves.

I never understood percentage tipping. Is it more work to bring a lobster to the table than a hamburger? I always thought a set amount per course per person made more sense unless the server is doing something extra like making a salad table side. Having said that I think service is better with tipping.

There’s no reason that moving to an all no-tip system needs to diminish service, particularly if the “tip” is built into the price of the meal. Better restaurants — that charge more — will be able lure better servers away from less expensive and well served places.

Straight salaries are one reason restaurants in France have more “relaxed” service. In the U.S., waitstaff is essentially free, so managers over-schedule. In France, more expensive staffing is generally means fewer servers.

The tipping system isn’t there to reward good service. Good service is what you expect at a restaurant. What you reward or punish is the variance from good service — bad service little or no tip and excellent service a higher that normal tip.

But without having a tipping system wherein the normal service receives a normal or basic tip, how do you communicate the punishment for lousy service?

I’m not sure I prefer a no tipping over a tipping service. In China they don’t encourage tipping but if someone tips the tips go to the owner for doing a great job of hiring great workers. And that is reasonable and logical — why would you want to patronize a restaurant whose owner hires lousy waiters who in turn provide lousy service, while on the other hand you want to compliment the owner’s good business practices by giving her some extra incentive for the great job she does.

Straight salaries are one reason restaurants in France have more “relaxed” service. In the U.S., waitstaff is essentially free, so managers over-schedule. In France, more expensive staffing is generally means fewer servers.

[urban elitist on April 9, 2014 at 4:53 PM]

How does being understaffed allow for a more relaxed service, whereas having too many workers creates an hectic atmosphere?

Depends on how much leeway exists in the market that will let the business jack up price of goods.

I worked in a restaurant environment for a few years. I can’t see that particular business choosing this. They need the motivation from servers to turn over tables more quickly, and tips provide some of that motivation.

Not directly – but the other servers know if one server is not pulling their weight – because the tip pool for everyone suffers when that person is on shift. And they DO let management know about it.
Also, if service is really bad, people don’t hesitate to grab a manager and let them know about it. Then it’s up to management to solve the problem – usually by firing the lousy employee after a warning or two.

dentarthurdent on April 9, 2014 at 4:28 PM

Correct, but a mediocre server might be able to skate by and get more than he or she would have otherwise. The pool system, which many restaurants use, really incentivizes waiters to be average. A waiter doesn’t feel the need to go above and beyond because they aren’t getting additional money. I’m all for going to a gratuity included system like in Europe and then allowing patrons to directly reward exceptional service with an additional tip to the server.

Interesting insight. If there were no tips and the waiter was getting his per hour living wage whether he had to new customers every 45 minutes to an hour or the same five drinking coffee all evening long, I have a feeling I know which he’d prefer.

So if the restaurant owner is paying his servers a straight wage when he didn’t use to, and is keeping his prices the same, then he was either taking more margin than other restaurants, or he expects to get bigger checks to make up the reduced immediate margin.

Actually, I think there is a stripper bar near me that may have this type of arrangement already, but it will probably take a few more visits before I can tell for sure. I will update as to my findings.

When living for a bit in the UK, I tipped the Chinese take away delivery guy about 20% Apparently they aren’t used to that because his eyes lit up when he saw it. Needless to say, I had the best delivery service the whole time I was there.

Good service is what you expect at a restaurant. What you reward or punish is the variance from good service — bad service little or no tip and excellent service a higher that normal tip.

But without having a tipping system wherein the normal service receives a normal or basic tip, how do you communicate the punishment for lousy service?

Dusty on April 9, 2014 at 4:54 PM

While I understand and accept the current system ( two of my kids were servers in HS and college to help pay their share of the costs) I have also lived in Europe where the tip is added in. You can add more for exceptional service or complain for poor service (good luck with any resolution to that)There are merits to that system as well.

However… why cant all service industries be rewarded or penalized for good or poor service through tips? Why is it just selected ones like restaurants and cab drivers? How about cashiers, bankers, real estate agents, others?

Straight salaries are one reason restaurants in France have more “relaxed” service. In the U.S., waitstaff is essentially free, so managers over-schedule. In France, more expensive staffing is generally means fewer servers.

[urban elitist on April 9, 2014 at 4:53 PM]

How does being understaffed allow for a more relaxed service, whereas having too many workers creates an hectic atmosphere?

Dusty on April 9, 2014 at 4:58 PM

By “relaxed” I meant slow (hence the quote marks in the original). Fewer waiters working more tables. I never said that more servers meant more hectic.

Correct, but a mediocre server might be able to skate by and get more than he or she would have otherwise. The pool system, which many restaurants use, really incentivizes waiters to be average. A waiter doesn’t feel the need to go above and beyond because they aren’t getting additional money. I’m all for going to a gratuity included system like in Europe and then allowing patrons to directly reward exceptional service with an additional tip to the server.

Illinidiva on April 9, 2014 at 5:04

PM

i worked in several restaurants where tips were pooled and never found that my fellow servers were incentivized to be mediocre. In any job, if you hire good people, they will work hard for the same reason good people in every profession will work hard — pride, ego, desire for promotion, fear of being fired. These were good restaurants, so maybe it’s different at TGI Fridays.

I’ve never worked in a restaurant, but my best friend was a restaurant manager for many years. He once told me that his biggest headache in terms of dealing with servers was over tips. They griped to him every shift about tips, and more servers (even good ones) quit over that aspect of work than anything else.

Frankly the tip system for restaurants always puzzled me. I don’t tip any other service profession: plumbers, mechanics, dry cleaners, grocery cashiers, etc. Never understood why food servers should be treated differently. I expect good service at other places even with no tips.

Having served for many years no way would I do it for only $15.00 an hour. Most good servers would never work for that little. It is at least half of what I have ever made when serving. Servers often only make on a weekly basis what a 40 hour a week employee makes, they just do it in 20 hours.

As for not claiming all of your income, almost everyone leaves the tip on their card and you have to claim it. Not like the old days of claiming just a percent of your sales.

I seem to remember a story circulating Facebook about a professor who gave students a chance to prove whether socialism worked, by averaging their test scores. It didn’t turn out well for them, and I don’t think it will turn out well for no-tip restaurants.

The anecdote (I don’t know if it is true or not) was to illustrate the hypocrisy of the Left, when something they “owned” was threatened. There appears to be a relation to the no-tip movement, but it is complicated when the tip pool is shared with bussers and cooks, who don’t normally receive any gratuities even though they contribute as much to a good experience as servers.

I think they will start having more problems with service than tip restaurants because there is no incentive to provide good service, only the threat of firing. All stick with an entitlement salary doesn’t seem to be the way to incentivize great service.

dominigan on April 9, 2014 at 3:59 PM

The laboratory of social science – try it and see what works.
I think great servers will serve well whether they are tipped or not, and bad servers expect tips regardless of service (it’s a couple of long stories).

Frankly the tip system for restaurants always puzzled me. I don’t tip any other service profession: plumbers, mechanics, dry cleaners, grocery cashiers, etc. Never understood why food servers should be treated differently. I expect good service at other places even with no tips.

AngusMc on April 9, 2014 at 5:43 PM

People used to tip all of these professionals (it’s not just a white-collar term), but that was phased out of the culture sometime in my youth, before I had enough money to tip anyone for anything.
My experience with service is almost entirely establishment-related: good business reward and promote good employees, and bad ones don’t.

That said, I am never averse to adding a bit to the bill for exceptional service, and my electricians and plumbers appreciate it.

OK, I grew up in the restaurant business. I know that most restaurant employees bust their butts. Being on your feet all day hurts. And catering to the American public; which has a tremendous percentage of the population that has never done physical labor [and waiting tables is physical labor] in their lives, that seems to think that food servers are in fact their serfs, and that somehow the server is responsible for errors in the kitchen, can be a real pain in the tuchus. They are real, live, human beings who are actually working hard to make a living. Beats the hell out of someone who is on welfare.

When planning to go out to eat at a sit down restaurant, I expect to tip 20% as the base. It can go up or down, depending on the level of service. Once or twice, I have run into an ambulatory hemorrhoid as a server. They got a penny, and the manager got an explanation why. If the server is pleasant, efficient, and attentive to our needs without hovering, they get 20%, especially if it is somewhere I go to regularly. If they are exceptional, it goes up. I know what they get paid per hour [and labor laws in most states have a lower minimum wage for restaurant servers than other workers] and how hard they work for it. And I try to be civil and friendly to them.

And if the management comps you for something [happens sometimes, I know a few restaurant owners], you tip the server based on what the check would have been if you were paying the regular price. They did the same work as if you were not comped.

I find that it enhances the experience of eating out, which is why you do eat out unless you are on the road or some such, if the staff know you and are pleased at you coming in. And believe me, if you are a regular, they have formed an opinion of you.